I was, until recently, Economics Editor of The Telegraph. You can find my book - 50 Economics Ideas You Really Need to Know - here.

Budget 2010: does it add up?

The bottom line is that this was a rather more sensible Budget than I had feared. The economic forecasts are still unrealistic in the coming years; the borrowing projections still look horrific – not the kind of thing any Chancellor would wish for. But, and it’s an important but, the projections are, respectively less unrealistic and less horrific than they previously were in the pre-Budget report. This will not be enough to reassure markets that the Treasury will do whatever it takes to bring the public finances back in order, but it is certainly not as bad as it could have been. Whether you view that as a good thing or not is a matter of opinion, so in order to help you make your own mind up, here are some of the important tables.

First off, economic growth. The Chancellor has left his growth forecast this year unchanged at 1.25pc (actually they put it as ranges, so to be precise: 1-1.5pc). He then cut economic growth next year from 3.5pc to 3.25pc, and left it unchanged in 2012. This is a very small step in the right direction: the forecast for this year is generally regarded as pretty fair, but the idea that the UK would bounce back so fast after facing such a nasty financial crisis has always seemed like wishful thinking. Had he been properly realistic, Alistair Darling might have cut the forecast for 2011 down significantly below 2pc. But there’s no way he would have done this. Why? Because weaker growth means weaker tax revenues, which in turn means a far nastier Budget deficit.

So how do the borrowing figures look? Well you can see the answer in this chart below.

click this to get a full look at it

Here you can see the difference between the borrowing forecasts in respectively, last year’s Budget, December’s pre-Budget report and today’s event. Look at the “effect of revisions and forecasting changes” underneath the “2009 pre-Budget report” row: it shows that in the coming years, the Government expects to borrow £11bn less this year as a result of lower unemployment (and therefore lower benefits payments), and that it expects borrowing to be lower for similar reasons in the following years. What is significant, and reassuring, is that the extra money hasn’t necessarily been spent straight off on other measures – as you can see on the next row down (entitled “effect of Budget 2010 policy decisions”).

It shows that next year the Government intends to spend a billion and a half (actually more like £1.4bn) extra this year, not to spend anything more, net, on measures the following year, and to start saving money by 2012/13. And what are those measures? The answer can be found in the table below. This is the definitive tally of where the Government intends to spend and tax more.

A few things worth stripping out. First, this is a net giveaway Budget, but only of £560m over the course of three years – not much by the standards of previous Budgets. You can see the stamp duty million pound home increase about a third of the way down – it brings in £390m over the next three years, while the stamp duty cut for first time buyers (up to £250,000) will cost £550m. It looks as though it will only last two years, while the higher rate on mansions will be a permanent feature.

Another peculiar feature is that the biggest single tax-raising measure is not this stamp duty feature but the closing of a tax loophole with Liechtenstein. The Treasury is calculating that this will make it a whopping half a billion pounds. I wonder what they know that we don’t about some impending tax cases?

Anyway, my initial reaction to the economic figures was that this would go down pretty well in the markets. For the duration of the Chancellor’s speech, my hunch was borne out. Check out this graph, which is the 10-year gilt yield over the course of today – a line which is a pretty good measure of the Chancellor's credibility in markets. The higher the level, the lower the credibility. Ignore the slight increase in yields at 12.30, which was due more to some positive US data than to the Budget itself. During the speech, as Mr Darling read out the forecasts, the yields trended down – a sign of slightly more confidence in the Chancellor’s ability to manage the deficit.

Suddenly, after the Chancellor sat down, the yields spiked violently, and although this was partly due to technical factors, and much of the spike was reversed, the government’s cost of borrowing has remained higher this afternoon.

The implication is that markets don’t much like the taste of it – that they have concluded that despite these borrowing reductions, the projections are not ambitious enough, and the spending cuts are not deep enough. I expect the Tories to seize on this in the coming days.

My very provisional verdict, so far, though, is to be slightly pleasantly surprised: Mr Darling has managed to resist the temptation for a pre-election giveaway – something that was hardly assured. No doubt he did this only after some severe battles with Gordon Brown and Ed Balls. He deserves to celebrate tonight. Perhaps with a nice glass of cider.

UPDATE: Here's a line from Brian Coulton, head of European ratings at Fitch [emphasis mine]:

“The lower than expected outturn for borrowing in 2009-10 is welcome, particularly in the face of weaker than expected economic growth. There has been some restoration of government’s fiscal forecasting credibility following several years of deficit overshoots even before the recession… With fiscal deficits around 0.5% to 1% lower throughout the medium term, UK debt to GDP peaks at 89.2pc in 2013-14 compared with 91.6pc stated previously in the PBR. While this inches in the right direction in terms of strengthening the medium term fiscal consolidation path, the deficit reduction path from 2011 is still slow."